Posts Tagged 'DVD'

Sticking with festivals and Video on Demand (see yesterdays post) some query the wisdom of festivals pursuing a distribution platform that has been around for some time and appears to some not to have fulfilled its promise. Exactly a decade ago analysts were predicting that ‘enhanced TV’ would be worth $20bn by 2004 (See The Hollywood Reporter April 28 2000). Well ten years on Screen Digest estimates global VOD revenues in 2009 to have been a more modest $2.9bn (about a fifth the size of the DVD market) and to reach $5.3bn by 2012.

However according to Screen International VOD may be on the edge of a breakthrough as DVD sales fall, the multiplication of ways in which to access VOD content – game consoles, TVs with built in web connection – and more sophisticated pricing strategies secure its place in the domestic living room. The rub here, though, is that contrary to what fans of the Long Tail might expect, ‘speciality’ films appear not to be benefiting from this democratisation of distribution channels. Why? because VOD reproduces the ‘aggregator’ role that distributors/video stores/online DVD rental outlets like LoveFilm etc. play in selecting, curating and promoting titles.

This is where Festivals could find a niche – with the potential to leverage their programming skills and ‘brand value’ in creating a VOD ‘label’ (and assuming they can do a deal with a carrier) a festival like Edinburgh could make like a ‘Metrodome/Soda/Optimum’ . (I would have included Tartan Films but sadly they went bust in 2008).

Why bother with Cable/Satellite VOD when you could do the whole thing online? Well there are a variety of reasons including anti-piracy, security of payment, the ‘installed base’ of things like hotel Pay-TV but also marketing and ‘perceived value’ advantages. In any event go-ahead festivals like Tribeca and others are trying to test out where and how they can use their market knowledge to create additional revenue streams that get the movies they love to show seen more widely.

Not content with getting a slice of the distribution action, not a few festivals – such as Adelaide and Melbourne – have also set themselves up as financier/producers. That some of their investments result in films that then premiere at their festival neatly closes the loop from production to distribution. Following that model the EIFF could become a rival to (or perhaps more accurately complement) Scottish Screen/Creative Scotland and the existing production companies…

[This post also published as a letter in the Guardian, Wednesday 31st March 2010] I have nothing against games or the games industry but I can’t abide commentators playing fast and loose with box office statistics to reinforce an otherwise valid point – that games are big, getting bigger and and are a crucial part of the creative economy. Yesterday’s Guardian Media story on how the games sector is celebrating their Darling tax breaks is a case in point. Citing Call of Duty: Modern Warfare 2’s opening week’s sales of $500m “dwarfing the opening weeks of blockbuster movies such as The Dark Knight ($203.8m) and Harry Potter and the Half-blood Prince ($394m)” and the games sales to date of over $1bn, the piece makes the routine but erroneous implication that big games outsell big movies.

In fact this comparison is extremely misleading – today theatrical revenues of movies typically account for less than one-fifth of total earnings and a movie like The Dark Knight (whose theatrical revenues actually stand now at over $1bn) can be expected to gross in excess of $3bn over its lifetime in distribution. Titanic’s total revenues passed $3.2bn ten years ago in 1999 when its global box office was $1.8bn)

Although focussing on blockbusters such as Titanic or Call of Duty can be misleading it remains the case that theatrical box office, while still the best predictor of overall revenue rank for films, is now a minor part of the overall picture, whereas retail sales of games is by far the largest part of total revenues. Time then, perhaps, for media journalists to use a more meaningful comparison than the current apples and oranges approach.

The widely reported spat between Odeon/UCI cinema and Disney which has resulted in the former boycotting the latter’s Tim Burton-helmed Alice in Wonderland reveals just how topsy turvy film business models are becoming. Disney want to release the movie on DVD five weeks earlier than the normal window of 17 weeks which they hope will increase their take from DVD sales and limit the loss to pirates, while the cinemas’ view is that reducing their exclusive window by a third will seriously erode their revenues – hence the boycott.

What this dispute reminds us is that the film value chain (from producer to distributor to exhibitor, TV and retailers) is composed of a number of discrete players who, although they usually operate in reasonable harmony, from time to time have divergent interests. This often happens around the introduction of new technology and so, from the wiring of cinemas for sound in the 30s to the installation of 3D projectors and screens today, issues about who bears which costs or how premium ticket prices or revenue from sale of 3D glasses are split can break out, as in this example, into open conflict.

The bigger threat to cinemas’ place in the once rigorously enforced release window chain is simultaneous/non-exclusive release across multiple distribution platforms – cinema, DVD, TV, VOD etc. which some in the industry consider the only way to counter the threat of file-sharing etc. Echoing the ‘freemium’ model in other entertainment media, music in particular, this way of pricing films is premised on the idea that you pay for the added value of the experience context (big screen, going with your mates, 450 varieties of confectionary in the case of the cinema; the DVD packaging and extras; the Wii tie-in version and so on) as control of physical copies becomes harder. (That said one of the big attractions of 3D to the studios is that is is, for the time being, much harder to pirate).

However no-one really knows how destabilising this will be to the still pivotal role of theatrical release in establishing the perceived value of the movie in other media, with few exceptions box office correlates to the (larger) revenue from DVD etc and remains the key opinion former after the opening weekend. So we can expect more conflicts like the Disney/UCI standoff if Pay-TV/VOD operators no longer get their exclusive window and their customers can get the same content cheaper somewhere else.

Some say the music industry has already shown that these more complex business models work but the big difference is that music comes in handy bite sized 3 minute chunks and you can afford to give away some chunks (tracks) if it gets people sampling then buying bigger chunks (box set albums with nicely designed lyric sheets) and ancillary merchandise and paying over the odds to see the act live and checking the fansite everyday and thus generate click through advertising revenue and…well you get the point. Movies dont easily fit this model – there’s very little repeat business (franchise movies like SAW etc. being the exception that proves the rule) and customer loyalty is practically non-existent. About the only people making money out of new movie business models are the people running courses on…how to make money out of the new business models. Of course that in itself is a business model.

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